High-speed rail investment may restart
　　Recently, reports say documents related to restarting high-speed rail investment have been submitted and are expected to be approved soon. Sources close to China Railway Corporation also revealed that after hearing the work report of China Railway Corporation, decision-makers stated that railways must continue to develop, because railway construction can absorb part of outdated production capacity, such as steel and cement.
　　Stimulated by the news that high-speed rail investment will restart, high-speed rail concept stocks soared yesterday. Jinyi Industrial (601002) hit the daily limit, Ziyi Co. (600848) rose 8.36%, Jinxi Axle (600495) rose 8.22%, and Beifang Chuangye (600967) rose 6.18%; in addition, many stocks such as Tgood (300001), Dinghan Technology (300011) and China Railway Erju (600528) also rose by more than 3%.
　　Analysts pointed out that Premier Li Keqiang recently stated that macro-control should keep the economy operating within a reasonable range, and that the economic growth rate and employment level should not fall below the “lower limit.” Under the current economic situation, in addition to supporting strategic emerging industries, restarting railway investment, which has no overcapacity pressure, will be a good choice; under this expectation, it is highly likely that high-speed rail concept stocks, which have been quiet for a while, will make a comeback.
　　According to analysis, the role of building high-speed rail in driving China's economy is self-evident. “If the economy is to develop, it is definitely impossible without railway development.” Wang Mengshu, academician of the Chinese Academy of Engineering, said that the construction of high-speed rail can not only drive local economic development, but also drive the development of thousands of factories in thousands of industries across the country.
　　“At present, downward pressure on economic growth is relatively high. Continuing to increase investment in railway construction will not only help boost domestic demand and improve people's livelihood, absorb excess capacity in steel, cement, building materials and other sectors, but also lay the foundation for economic transformation and upgrading.” Industry experts pointed out in an interview with reporters.
　　Taking the Beijing-Shanghai high-speed railway as an example, with a total investment of 220.94 billion yuan, it created numerous employment opportunities, and more than 114,000 people found jobs because of the high-speed rail. High-speed rail construction investment reached 190 million yuan per day, consuming 10,000 tons of steel bars, 35,000 tons of cement and 110,000 cubic meters of concrete per day, and further drove the development of multiple industries along the line that are supporting facilities for high-speed railway construction.
　　Some experts have estimated that during the construction period of high-speed railway, every 1 yuan invested drives 10 yuan of investment. After the high-speed railway is completed, it provides important support for expanding domestic demand. From a global perspective, the development of the first-generation high-speed railway represented by Japan has lasted nearly 50 years. It not only promotes the economy in the short term, but also promotes balanced economic development along the line in the long term, driving consumption of people and goods flows, and promoting the development of related industries such as real estate, industrial machinery and steel.
　　Analysts pointed out that China is currently actively expanding domestic demand to boost the economy. In this context, whether in the short term or long term, actively giving play to the role of high-speed rail in expanding domestic demand is of great significance.
　　Industry faces development opportunities
　　In 2008, the clarion call for the high-speed rail “Great Leap Forward” was sounded, and China added 300 billion to 700 billion yuan of railway investment each year. In 2009, the Ministry of Railways even signed strategic cooperation agreements with 31 provinces, municipalities and autonomous regions to accelerate railway construction, which meant that under the huge investment pull, from infrastructure and equipment to upstream components, the entire high-speed rail industry chain entered an exceptionally long high-prosperity cycle.
　　Many people publicly expressed optimism about high-speed rail investment opportunities. In early 2011, as the results of a series of railway investment policies emerged, the upsurge in high-speed rail concept stocks swept through the investment community. “Against the background of unclear macroeconomy at that time, cyclical industries faced the risk that future growth could not be delivered, and only earnings certainty and low valuation levels could provide an effective margin of safety.” industry insiders pointed out.
　　However, later, due to the sudden fall of former Minister of Railways Liu Zhijun, personnel turmoil was triggered in the Ministry of Railways departments and local railway bureaus. The subsequent “July 23 accident” made high-speed rail concepts fall from the clouds overnight, which not only changed the original rapid development trend of the high-speed rail sector, but also caused the entire industry chain to slow down.
　　Hou Bukui, a researcher at Aerospace Securities, said that temporary “quietness” cannot reduce or change the huge driving role of railway construction in stimulating the economy under China's current situation. In the next three years, the annual newly added railway mileage should be about 6,500-7,000 kilometers, equivalent to an average investment of more than 500 billion yuan per year over the next three years.
　　This is indeed the case. As the railway system accelerates its full entry into marketization, since last year the former Ministry of Railways has delegated the leadership of intercity lines to local governments, stimulating a round of investment upsurge by local governments. Railway system personnel said in an interview with this newspaper that the next step in railway construction will further achieve “localization” to ensure the scale of railway construction.
　　A Galaxy Securities research report pointed out that high-speed rail is to China what the railway era was to the United States at the end of the 19th century. It will completely rewrite China's economic geography and bring China from the past export-oriented development model to an endogenous development model. The rise of central China, development of the west, revitalization of the northeast and new urbanization will become reality because of high-speed rail.
　　“High-speed rail and other rail transit have fast speed, large transport capacity, safety and reliability, can save time over short and medium distances, and offer high travel comfort. As a low-pollution and high-efficiency mode of transport, high-speed rail meets the country's requirements for energy conservation and environmental protection.” analysts told reporters that under such a background, the high-speed rail industry faces medium- and long-term development opportunities.
　　According to the medium- and long-term railway network plan, by 2020, the railway operating mileage will reach more than 120,000 kilometers. Among them, newly built high-speed railway will reach more than 16,000 kilometers; together with other newly built railways and upgraded existing lines, China's rapid passenger transport network will reach more than 50,000 kilometers, connecting all provincial capital cities and cities with a population of more than 500,000, and covering more than 90% of the national population.
　　Focus on three types of stocks
　　High-speed rail construction is a huge systemic project, affecting an extremely wide range of upstream and downstream industries. It is understood that according to the sequence of benefiting during high-speed rail construction, it can be divided into four major parts: infrastructure construction (including bridge, tunnel and station construction, track laying, etc.), rolling stock (including complete vehicles, axles, fasteners, control devices and other components), electrification configuration (including construction of communication signal systems and traction power supply systems), and operation and maintenance (including construction of operation dispatching systems and customer service systems).
　　According to Ministry of Railways data, the composition of total high-speed rail investment is: infrastructure accounts for 40% to 60% (including bridge, tunnel and station construction, track laying, etc.); rolling stock procurement accounts for 10% to 15% (including complete vehicles, axles, fasteners, control devices and other components); the remaining part accounts for 25% to 40% (including communications, signals and information engineering, electric power and electric traction power supply, etc.).
　　Analysts at Founder Securities said that with the construction of the railway network, investment in locomotives and rolling stock will grow rapidly, with annualized growth of more than 30% within five years; equipment, parts, components and maintenance services will grow rapidly with the rapid increase in rolling stock ownership, with annualized growth of more than 20% within five years; railway freight capacity will grow by more than 10% annually, and high value-added transport logistics will receive key development; informationization construction runs through the entire railway construction process and will maintain rapid growth.
　　Analysts pointed out that high-speed rail is one of the few industries in China that has succeeded in “exchanging market for technology.” It has now formed complete intellectual property rights, unique and rich Chinese experience, data, technology, products and brands, and has strong international competitiveness. In addition, railway is the lowest-carbon and most environmentally friendly mode of transport, so high-speed rail has become the ideal choice for future transport. In this context, it is highly likely that the government will restart high-speed rail investment.
　　In terms of operational strategy, the above analysts suggested focusing on the following three types of high-speed rail concept stocks: first, infrastructure-related, typically represented by China Railway Group (601390), China Railway Construction (601186), China Railway Erju (600528) and Tunnel Engineering (600820); second, machinery and rolling stock-related, such as CSR (601766), CNR (601299) and Beifang International (000065); third, information and electronic equipment-related, such as Jinyi Industrial (601002), Times New Material (600458), Huihuang Technology (002296), Yuanwanggu (002161), Century Real (300150) and New Beiyang (002376).